GR makes trade mag list of soaring home prices

February 7, 2012
| By Pete Daly |
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GR makes trade mag list of ‘soaring’ home prices

Pete Daly

The Grand Rapids-Muskegon-Holland region is among the top 10 in America for increased list prices on homes for sale in 2011, as compiled by Realtor Magazine Daily and reported in late January.

Miami, Fla., had the highest year-over-year increase: 32.5 percent, with the median list price of homes at $265,000 in November 2011 compared to November 2010.

In fact, seven of the top 10 regions for listed price increases were in Florida — but coming in 10th was Grand Rapids-Muskegon-Holland, which had a year-over-year listed price increase of 13.2 percent, with the median list price pegged at $137,000.

Julie Rietberg, CEO of the Grand Rapids Association of Realtors, said Realtor Magazine is one of the best-read publications among real estate sales businesses. However, she cautioned that the article focused on list prices — not sale prices.

Those homes “haven’t sold yet,” she added. “Granted, the likelihood is they’re listing them higher because they’re starting to sell higher,” said Rietberg.

The listed prices in the Realtor report are also median prices, versus the average. A median price “tends to be a little bit lower than average,” she said.

“Still, it’s a good sign,” said Rietberg, adding that the average sale price in this region last year “stayed almost identical, within a few dollars,” compared to prices in 2010.

The average sale price in 2009 was $108,000. It jumped to $120,000 during 2010, and then “stayed right at that $120,000 in 2011,” she noted.

2010 was the year of the federal government’s first-time home buyer tax credit, which resulted in a “surge” in sales considered by real estate professionals to be somewhat artificial — skewed by buyers who took the plunge into home ownership because of the attractive tax credit.

“But the fact that we maintained that (sale price statistic in 2011) is, I think, a good thing,” said Rietberg.

When asked if home sales and prices in West Michigan will definitely improve in the long term, Rietberg said the 2011 statistics are encouraging, and she added that she has been “hearing from (GRAR) members every day now that they’re seeing multiple offers on property again.”

The GRAR website posts statistics, with the January stats covering the last several years, including end results for 2011. It provides several indicators of an improving home market in the region, and one of those indicators cited by Rietberg is the “average months of inventory.” That measurement compares the inventory on hand with the rate at which homes are selling. The result is the average number of months estimated to sell off that inventory.

The average months of inventory began climbing in 2004, when it reached 6.2 months. From 2005 through 2008, it increased each year, finally ending at 13.3 months. 2009 and 2010 had identical average months of inventory — 9.7 — but in 2011, it dropped significantly to 6.2 months.

Rietberg said four to six months of inventory “is what we would consider a healthy market. We’re really coming back down now in that healthy area. We’re real happy with what the statistics are showing right now.”

In 2011, the number of homes sold here, according to GRAR, was about 10,135, down from the tax credit year of 2010, when 10,247 were sold.

In 2007, there were 34,262 new listings of homes for sale in the GRAR region. That dropped to 27,023 in 2009, and 26,374 in 2010. Last year there were only 16,378 new listings.

The average number of listings at any given time during 2011 was 5,204 houses, compared to 8,621 during 2010.

Joel Van Elderen, vice president of mortgage sales at Macatawa Bank, said his organization is “definitely noticing an uptick in purchase transactions, which is certainly a good indicator the housing market is starting to improve.”

Van Elderen said he believes many more potential buyers are realizing that the low interest rates are a good vehicle for relatively cheap financing.

Some small pockets around West Michigan are starting to improve faster than the others, he said, including East Grand Rapids.

Van Elderen said banks in general here are seeing their mortgage business in the pipeline growing, and some of the price points “are starting to show some stability.”

Low appraisals seem to have leveled off in some areas, he said, but he added that low appraisals are not going away: “Don’t get me wrong. We’re still dealing with that on a consistent basis.”

He said many real estate agents in the area have done a good job of understanding the market and helping their clients set reasonable prices for their homes, while also helping their buyers come up with more realistic offers on properties.

“People are starting to understand the market we’re in and being very reasonable about it. When you start from that standpoint, the whole transaction itself will go a lot better,” said Van Elderen.

Another good sign of an improving economy in connection with the housing market in West Michigan was a drop in the November foreclosure rates in the Grand Rapids/Wyoming MSA. That information is from CoreLogic, a publicly held company that maintains one of the largest databases on U.S. real estate, mortgage applications and loan performances.

The CoreLogic data indicates that the rate of Grand Rapids-Wyoming area foreclosures among outstanding mortgage loans was 1.74 percent for November 2011, compared to November 2010 when the rate was 2.14 percent.

On a year-over-year basis, the foreclosure rate in Grand Rapids-Wyoming decreased slightly more than 21 percent. Foreclosure activity here is lower than the national foreclosure rate, which was 3.41 percent in November.

The mortgage delinquency rate has also decreased, according to CoreLogic. In November, 5.26 percent of mortgage loans were 90 days or more delinquent, compared to 5.89 percent for November 2010. On a year-over-year basis, the mortgage delinquency rate has decreased slightly over 13 percent.

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